With 3,000 new patent applications filed in 2004 and an annual litigation bill of close to $100 million over patent
disputes, Microsoft’s recent proposal for revamping the U.S. patent system shouldn’t come as a surprise. Some suggestions coming out of Redmond include: Allowing third parties to challenge patents “administratively,” rather than through litigation, and creating a special court that would consolidate and hear all patent cases. “We want the system to be more predictable and efficient,” says David Kaefer, Microsoft director of business development. Which seems like an admirable goal in an industry rife with patent disputes.
The current scuffle between Intermec and Symbol exemplifies the legal wrangling common to this industry. In the latest round of lawsuits between the two companies, Intermec charged Symbol with infringing on six Intermec patents, a move that was a countersuit to Symbol’s suit, filed only days before. In that particular case, Symbol charged Intermec with violating Symbol’s patents for wireless standard 802.11. But the Symbol suit didn’t start it; Intermec filed the original suit against its RFID competitor Matrics, which Symbol acquired last summer.
Of course, patent litigation isn’t confined to the United States. In Britain, for instance, mobile phone colossus Ericsson is currently suing Sendo, a Swedish company, for its apparent infringement on patents covering Ericsson’s GSM and GPRS technologies. In an ironic but, given the industry, predictable twist, Sendo settled a suit with Microsoft last year, after claiming Microsoft had stolen its handset technology and given it to other handset makers. What makes the Sendo/Ericsson case a little different from the Intermec/Symbol dispute is that Sendo openly admits to using Ericsson’s technology, its only dispute was the price. “We’re prepared to pay a license fee, but only on the basis that it’s fair and reasonable,” Hugh Brogan, founder and CEO of Sendo, has openly commented.
And this seems to be what a good part of the legal wrangling is about: licensing fees. As the recent settlement between mobile e-mail vendor Research in Motion (RIM) and mobile e-mail patent holder NTP exhibited, licensing fees offer patent holders the chance to make some good money. Tony Rizzo, Mobile Technology Sector Head at The 451 Group, points out, companies like NTP “exist solely for the purpose of making money on a collection of wireless patents.”
While RIM settled with NTP after two years of litigation for $450 million, a bucket of money by any standard, Rizzo notes it isn’t “as much as RIM might have ended up losing, long-term, had it continued to bear the weight of the suit.” It again seems it wasn’t a case of whether NTP would be paid but rather how much and when.
As for Microsoft’s call for a predictable and efficient system, David Ferrell, chairman of the Carr & Ferrell law firm’s intellectual property practice group, points out, “many of these proposed reforms have been debated heavily in recent years.”